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7 Common Investors Claims in FINRA Arbitration in 2022

June 28, 2022 Blog

Each year we represent dozens of investors who have suffered fraudulent losses in FINRA arbitration. The Financial Industry Regulatory Authority (FINRA) regulates securities brokers and brokerage firms, and FINRA arbitration provides a streamlined forum for defrauded investors to pursue claims for recovery. Now that we’re halfway through the year, here is a look at some of the most common types of claims our investment loss attorneys are handling in 2022.

1. UBS Yield Enhancement Strategy (YES) Losses

We are continuing to represent a significant number of investors who suffered substantial losses with UBS’s Yield Enhancement Strategy (YES). As we recently discussed, the tables are turning in UBS YES arbitration, with FINRA arbitrators ruling in investors’ favor in the substantial majority of recent cases.
To recap, the UBS Yield Enhancement Strategy was a high-risk strategy that the firm’s brokers sold to well-heeled investors, often without a clear understanding of the risks involved. When the strategy did not work as UBS anticipated, many investors ended up suffering hundreds of thousands of dollars in fraudulent losses.

2. GWG L Bond Losses

The GWG Holdings L bond saga is another example of what can go wrong when brokerage firms put their own interests first and when brokers sell complex investment products without an adequate understanding of the risks involved. Our firm is actively handling cases on behalf of defrauded investors in FINRA arbitration.

GWG Holdings’ L bonds were high-risk private placements with limited liquidity, and investors’ returns from these investments largely depended on GWG Holdings’ management. Unfortunately, GWG Holdings committed numerous missteps (if not intentionally misleading investors), and it filed for bankruptcy in 2022. As a result, the time for L bond investors to act is now.

The Wall Street Journal recently published an in-depth report on the collapse of GWG Holdings into bankruptcy and actions by the U.S. Securities and Exchange Commission (SEC) to investigate GWG Holdings and the broker-dealers selling its L Bonds to retail customers. Last week, the SEC also charged broker-dealer Western International Securities Inc. with recommending and selling GWG’s L Bonds to retail customers without having a reasonable basis to believe the investments were in the customers’’ best interests. Our firm is handling claims against all broker-dealers on behalf of defrauded investors in FINRA arbitration.

3. Structured Product Losses

Structured notes, reverse convertibles and other structured products are also high-risk investments that are not well-suited to retail investors. Unfortunately, this does not stop unscrupulous brokerage firms and brokers from pushing these investments on their clients in order to collect the high commissions they offer. The war in Ukraine and various other factors have increased the risks associated with many structured products in 2022; and, as a result, we are handling a large number of structured product fraud claims in FINRA arbitration as well.

4. Selling Away

Selling away” refers to the practice of a broker selling an investment that his or her brokerage firm does not offer. This practice can be highly risky for investors (because these investments often are not fully vetted) and highly rewarding for brokers (because they often reap high fees for promoting investments that their brokerage firms will not).

With the growing number of structured products, initial coin offerings (ICOs) and other novel investment opportunities on the market, we are seeing an increase in selling away cases in 2022. While selling away is not inherently fraudulent, it will entitle investors to recovery in FINRA arbitration in many cases.

5. Ponzi Schemes

Even investment schemes seem to go in cycles. In 2022 we are seeing a rise in Ponzi schemes once again. This includes the recent alleged Ponzi scheme involving Horizon Private Equity and Oppenheimer financial advisors John J. Woods, Michael Mooney and Arthur Brown. If you believe you may have fallen victim to the alleged Horizon Private Equity Ponzi scheme or any other Ponzi scheme in recent years, you should consult with one of our investment loss attorneys about filing for FINRA arbitration.

6. Conflicts of Interest

The SEC’s long-anticipated Regulation Best Interest (Reg BI) took effect on June 30, 2020. Reg BI was specifically intended to ensure that investment brokers put their clients’ interests ahead of their own.

Unfortunately, this has not panned out. Our investment loss attorneys are continuing to handle a large volume of cases in which our clients have suffered fraudulent losses due to violations of Reg BI and FINRA’s analogous rules.

7. Overconcentration, Unsuitability and Other Forms of Investment Fraud

In addition to the issues discussed above, more traditional forms of investment fraud continue to present risks for retail investors as well. This includes common forms of broker fraud such as overconcentration (failure to diversify), making unsuitable investment recommendations and making unauthorized trades.

Contact the Investment Loss Attorneys at Zamansky LLC

If you need to know about seeking to recover fraudulent investment losses in FINRA arbitration, we encourage you to contact us for a complimentary consultation. To speak with one of the experienced investment loss attorneys at Zamansky LLC in confidence, please call 212-742-1414 or request an appointment online today.

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